In what has been dubbed the biggest loan fraud in India's banking history, police have so far arrested at least a dozen people - six from the bank and six more from Modi's and Choksi's companies.

File photo of Punjab National Bank.

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New Delhi/ Mumbai: The Institute of Chartered Accountants of India (ICAI), a state-controlled regulator for the sector, has said it is probing whether auditors played a role in perpetrating the alleged $1.77 billion fraud that Punjab National Bank unearthed last week.

The ICAI said on Thursday it has asked the Securities and Exchange Board of India, Punjab National Bank (PNB) and federal investigating agencies to share their findings about the alleged fraud, including anything related to the involvement of any chartered accountants.

The ICAI, which functions under the administrative control of the Ministry of Corporate Affairs, said it has set up a committee to study the systemic lapses that contributed to the fraud and to suggest remedial measures and improvement.

Separately, the Economic Times newspaper reported that PNB has tapped PwC to conduct a probe into the alleged fraud that would help the bank build a case against jewellers Nirav Modi and Mehul Choksi. PNB officials were not immediately reachable for comment, while PwC declined to comment on the matter.

Modi, his companies, and firms with links to his uncle Choksi, are at the centre of the alleged fraud that involved illegally issued letters of undertaking from PNB which were used to get credit from overseas branches of other, mostly Indian banks.

In what has been dubbed the biggest loan fraud in India's banking history, police have so far arrested at least a dozen people - six from the bank and six more from Modi's and Choksi's companies.

A lawyer for Modi has denied his client was involved in any fraud. Choksi has not commented but his firm, Gitanjali Gems, has also denied involvement in the alleged fraud.